The analytical theme this week has been to observe the market movement and then go scrambling for justification.  Such is the nature of a week without any actionable econ data. This morning’s example involves yesterday evening’s announcement of a trade deal with Japan which can generally be credited with boosting stocks and hurting bonds in the overnight session.  There’s been just a bit more selling as domestic trading ramps up for the day, but not enough to break above this week’s high yields.

Mortgage application activity managed a modest increase last week despite slightly higher rates. The Mortgage Bankers Association’s (MBA) weekly survey showed a 0.8% rise in the seasonally adjusted Composite Index for the week ending July 18, 2025. “Mortgage rates moved higher last week, with the 30-year fixed rate edging up to 6.84 percent, the highest level in four weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications finished the week higher, driven by conventional purchase loans, and continue to run ahead of last year’s pace. After reaching $460,000 in March 2025, the average purchase loan amount has fallen to its lowest level since January, at $426,700.” Refinance applications declined 3% from the previous week but remain 22% higher than the same week last year. The refinance share of total applications dipped to 39.6% from 41.1%. Purchase applications rose 3% on a seasonally adjusted basis and are now 22% higher than last year. The unadjusted purchase index was up 4% week over week. The average 30-year fixed rate rose to 6.84%, the highest since mid-June, while rate movements across other loan types were mixed. Jumbo and FHA rates held steady, but points shifted in opposite directions. Mortgage Rate Summary:
30yr Fixed: 6.84% (+0.07) | Points: 0.62 (unch)
15yr Fixed: 6.14% (+0.10) | Points: 0.69 (+0.06)
Jumbo 30yr: 6.75% (unch) | Points: 0.70 (+0.04)
FHA: 6.52% (unch) | Points: 0.79 (−0.07)
5/1 ARM: 6.01% (unch) | Points: 0.28 (−0.17)

The massive lender and servicer continues to tout its recapture opportunity, with a quarter of its $700 billion portfolio holding note rates above 6%.

The D.C. District Court found the Trump administration’s firings of two Democratic board members on the National Credit Union Administration to be “unlawful” and ordered Todd M. Harper and Tanya F. Otsuka to be reinstated.

The nation’s sixth largest real estate broker has created Elliman Capital in a strategic alliance with Associated Mortgage Bankers.

Sam Altman, the founder and CEO of OpenAI, said the rapidly growing capabilities of AI are rendering many of banks’ fraud prevention measures useless and warned of an “impending fraud crisis” if banks don’t update their processes.

A “large institutional investor” will provide funding to assist Rithm in acquiring as much as $1.5 billion worth of residential transition loans.

Solid AM Gains Stick Around All Day

Bonds improved in the morning following comments from Bessent that gave the markets more insight to his role in defusing last week’s frenzy over the potential ouster. In short, he’s the voice of reason and the bond market likes that. Additional gains came courtesy of 9:30am NYSE tradeflows.  At the time, stocks were sinking. Then in the afternoon, stocks rebounded without pulling bond yields higher.

Market Movement Recap

10:59 AM Flat overnight but gaining ground in AM hours following Bessent comments on Fed and NYSE opening bell volatility.  MBS up 5 ticks (.16) and 10yr down 4.1bps at 4.339

01:02 PM Little-changed versus 11am levels and mostly sideways since then

03:48 PM best levels of the day with MBS up 5 ticks (.16).  10yr still flat at stronger levels, down 4.3bps at 4.337

Last week, we got a sneak preview of how the market would react to Fed Chair Powell ending his term early. In a nutshell, only the shortest-term rates would improve while most consumer rates would move higher–including mortgages. This isn’t conjecture, but rather the actual response in the bond market (bonds dictate interest rates).  Thankfully, the response reversed after Trump said he wasn’t planning on firing Powell. Nonetheless, doubt remains as to whether Powell is susceptible to other efforts.  With that in mind, the rate market reacted positively this morning when additional details emerged regarding Treasury Secretary Bessent’s thoughts on the matter.  In not so many words, Bessent told trump not to fire Powell and this morning’s coverage just expanded on that sentiment.  The Bessent news helped the bond market begin the day in stronger territory. Other factors made for modest additional improvement. Mortgage lenders didn’t react to the market movement in a major way, but the average lender lowered their 30yr fixed rate offering by 0.01%.  That brings our rate index in line with levels last seen on July 9th–and that’s the lowest we’ve seen in nearly 3 weeks. 

You may not believe in climate change, but your insurance company and mortgage servicer certainly do. It is a fact that warmer air can hold more moisture, and a new peer-reviewed study published in the Journal of Catastrophe Risk and Resilience found that insured losses from hurricanes could rise 50 percent if global atmospheric warming hits the 2 degrees Celsius threshold. A lot of those losses come from the areas affected by hurricanes expanding well northward along the Eastern Seaboard, with places that had been considered relatively safe from the monster storms suddenly now well in range of tropical storms. Lenders are well aware that Florida still sees the largest absolute increase (its already high losses are projected to rise another 44 percent if the 2-degree threshold is broken) but areas that had relatively low risks are poised to see a higher percentage increase. New York’s insured hurricane losses are projected to rise 64 percent, and Massachusetts’ poised to rise 70 percent annually. (Today’s podcast can be found here and this week’s podcasts are sponsored by Wholesale Mortgage Direct (WMD), whose mission is to deliver high demand, innovative products unique to the wholesale industry, including MyEQNow, which is one-of-a-kind TraDigital HELOC platform. WMD is your trusted partner for innovative HELOC, NonQM and/or Reverse options. Today’s has an interview with EPM’s Phil Mancuso on his journey in mortgage, winning business in this environment, and lessons in leadership.)